World Economy

World Must Revise Stance on Saudi Regime to End (P)GCC Crisis

Doha’s economy is facing huge challenges  that might affect domestic and foreign investments.Doha’s economy is facing huge challenges  that might affect domestic and foreign investments.
MBS has been the major driver of the dispute (with Qatar), which has no end in sight, say legal professionals and experts

The international community must revise its stance towards Saudi Arabia's Crown Prince Mohammed bin Salman (aka MBS) to end the current Persian Gulf crisis, experts of international law and Middle East politics told a conference in London.

Panelists agreed that unless world leaders take stronger action, the probability of the Persian Gulf crisis ending soon is low, and constitutes a threat to the wider region, Al Jazeera reported.

"We are seeing a deepening and widening of the crisis. I don't see it changing any time soon unless other states change their position. Europe and the international community must change their position. They are morally obliged to, and I would argue, legally obliged to," said Carl Buckley, a barrister and chambers director at Guernica 37 International Justice Chambers.

"Saudi Arabia is emboldened to continue to act as it sees fit, because silence is seen as tacit approval," Buckley said at the event, which was hosted by Diwan London and titled The Gulf Arab States in Transition: The Present Predicament and Future Prospects.

Diplomatic Crisis

Fifteen months after the advent of the latest Persian Gulf crisis, the (Persian) Gulf Cooperation Council Arab states have been unable to resolve the dispute, which has grown increasingly bitter as it has unfolded.

The diplomatic crisis began in June 2017, when Saudi Arabia, the United Arab Emirates, Bahrain and Egypt severed diplomatic relations with Qatar.

The coalition claimed that Qatar's alleged support for terrorism was the main reason for the blockade, contending Doha had violated a 2014 agreement with members of the (P)GCC.

Qatar denies all allegations raised by the quartet.

Bill Law, a journalist who has reported from the Middle East for the BBC, reflected on the way the current crisis has changed the dynamics of the Persian Gulf. "The (P)GCC has been ruptured permanently."

Saudi Arabia and other countries involved in the blockade of Qatar have strongly criticized Qatar's relationship with Iran.

Reducing diplomatic relations with Iran was a key coalition demand at the beginning of the crisis, as well as ceasing military coordination with Turkey and closing Al Jazeera.

On August 24, 2017, Qatar announced that they would restore full diplomatic relations with Iran.

Negative Consequences

At the London conference on Thursday, analysts warned that should the crisis continue, negative consequences may be difficult to reverse. "There is a fragmentation of the concept of the Persian Gulf," said Madawi Al-Rasheed, a visiting professor at the LSE Middle East Center. "I can't see that any repair can be done, not even a shared enemy would bring them together."

Law suggested that a lack of perspective from Persian Gulf leaders was a major factor in the continuation of the crisis. Calling for a more measured approach, he said: "Sane and sensible heads should get together and solve this pointless dispute. It seems that those are in short supply, and so this crisis will go on and on and on."

Analysts agreed that the internal dynamics of Saudi Arabia, particularly the influence of MBS, has been a major driver of the Persian Gulf crisis.

Economic Instability in Saudi Arabia

Al-Rasheed said, using the popular acronym for the crown prince: "MBS is ruling without a legitimacy narrative. Why should we believe in MBS?"

The 33-year-old Saudi political leader has recently been beleaguered by a string of setbacks to his economic development plans. In August, his plans to list Saudi company Aramco on the stock market and raise around $100 billion by selling off 5% collapsed.

There has been increasing speculation that the kingdom may face economic instability in the near future. Al-Rasheed said: "Saudi Arabia will be in debt. In the near future, it is expected Saudi Arabia won't be able to export 10 to 12 million barrels of oil a day because most of it will be consumed within Saudi Arabia."

Conference delegates compared the economic uncertainty in the kingdom with Qatar's relative stability. "Qataris have seen off the blockade, the economy is buzzing. It is hard to see Qatar as the loser here," said Law.

Rise in Qatar's Debt

The Qatari economy continues to face aggravated foreign and domestic debts—there are several indicators showing that Doha’s economy is facing huge challenges that might affect domestic and foreign investments, Aawsat reported.

Qatar National Bank data revealed the rise of foreign and domestic debts of the Qatari government and the institutions affiliated with QNB to around QAR574 billion (around $158 billion) end of July. The same data showed that the Qatari banks internal claims from the Doha government and its institutions reached around QAR466 billion ($128 billion) end of July. This indicates a remarkable rise in the first year of diplomatic boycott that Doha is facing by the countries sponsoring the fight against terrorism.

QNB data indicated that the volume of the banking sector claims from the private sector reached around QAR517 billion after it was QAR467 billion, a rise of around QAR60 billion in one year.

Figures show that foreign investment in Qatar dropped 10.3% during the first quarter of 2018. On an annual basis, figures show a drop of QAR77.6 billion ($21.3 billion), compared to the first quarter of 2017.

Add new comment

Read our comment policy before posting your viewpoints